LOCAL GOVERNMENT AGENCY

FEDERAL AWARD COMPLIANCE CONTROL RECORD[1]

NAME OF CLIENT:
YEAR ENDED: / 2014
FEDERAL AWARD NAME: / Capitalization Grants for Clean Water State Revolving Funds
CFDA#: / #66.458

NOTE:

·  This FACCR was written for funds that passed through the Ohio EPA, and includes ARRA requirements.

·  Under ARRA, federal agencies had the option, for pre-existing programs that started receiving ARRA money, to either create new CFDA #’s for the ARRA money, or include it under the pre-existing program CFDA #. The USEPA chose to NOT create new CFDA #’s for their ARRA programs. Therefore both the ARRA and non-ARRA portions may be included under the CFDA # listed above. See Section V below.

o  OEPA used ARRA assistance exclusively for principal forgiveness for qualifying Ohio local government projects.

·  Pursuant to an email notification from CFAE dated 4/27/2011, Advisory Memo 2001-05 no longer applies. Meaning, this program is subject to single audit requirements at the local level; however, USEPA Memo SRF 07-03 provides the OEPA with an alternative option to the traditional single audit. Applying the alternative approach, OEPA can select certain LGA project awards that cumulatively equal OEPA’s Federal Capitalization Grant award for each year (however, beginning 9/22/14 OEPA can no longer exceed the amount – see note below). The selected projects must then receive a single audit. In any year where the alternative single audit approach is being applied, those projects not selected are not required to report the program/project on their Schedule of Expenditures of Federal Awards (SEFA) (i.e., the program/project will not be subject to single audit).

o  OEPA first implemented the alternative single audit approach for fiscal year 2010 LGA audits. OEPA annually evaluates whether the alternative single audit approach is more economical than the traditional A-133 single audit. If so, the alternative audit approach is applied. However, OEPA reserves the right to reinstitute the traditional single audit approach in any year where OEPA cannot meet the terms and conditions specified in USEPA’s Memo SRF 07-03 or where the alternative approach is not cost-beneficial to most LGAs. SEE SECTION V FOR LIST OF ENTITIES REQUIRED TO REPORT.

o  Beginning Fy 2014, state SRF programs must use the same group of loans for the purpose of meeting the federal crosscutter, single audit, and FFATA reporting requirements. This will not impact local auditors – OEPA is just changing their process of selecting entities required to report this program on their SEFA, as listed in Section V. (Source: US EPA Memo titled “Application of Equivalency Under the Federal Funding Accountability and Transparency Act”, dated 9/22/14)

·  Beginning in Fy 2014, the ARRA 1512 tests previously in Section L are no longer required to be tested by auditors. All other ARRA tests are still required to be tested, if applicable. (See Section L for further info.)

·  The 2014 OMB Compliance Supplement clustered this program with CFDA 66.482, Disaster Relief Appropriations Act (DRAA) Hurricane Sandy Capitalization Grants for Clean Water State Revolving Funds. However, Ohio was not listed as state receiving these funds and therefore, 66.482 will not be included in this FACCR. If you have an entity that received funds under 66.482, please contact CFAE for instructions.

·  The projects selected in Section V are the minimum reporting requirement for these entities. If a selected entity chooses to report all their federal projects, we would not need to have any adjustments or citations.

The American Recovery and Reinvestment Act (Pub. L. No. 111-5) (ARRA) has significant implications for audits performed under OMB Circular A-133. Auditors should specifically ask auditees about and be alert to recipient and subrecipient expenditure of funds provided by ARRA.

Compliance requirements that are the same for ARRA and non-ARRA transactions are documented and evaluated in the regular Part of the FACCR and not in Section N. The Applicable Compliance Requirements box above documents which Parts of the FACCR include ARRA cross-cutting requirements. Note: ARRA “Cross-cutting requirements” are documented in bold-print/ light-blue highlighting throughout the appropriate Parts of this FACCR. ARRA Cross-cutting requirements are requirements that generally apply to all ARRA programs.

Auditors should review the terms and conditions of the grant agreement, etc. to identify significant program-specific ARRA requirements. Auditors will need to modify this FACCR to document and test additional significant program-specific ARRA requirements identified during their review.

Update yellow highlighted items based on specific program/grant.

Blue highlighted (bold) information references ARRA.

Grey highlighted information was obtained from the pass-through agency, Ohio Environmental Protection Agency (OEPA) and Ohio Water Development Authority (OWDA).

Orange highlighted text is additional information from AOS Center for Audit Excellence (CFAE)

Prepared by AA / Date
Reviewed by AM / Date
Reviewed by SAM / Date

(NOTE: The above sign-off boxes are n/a to AOS audits completed in Teammate. AOS auditors should perform their sign-offs in the Teammate system.)

Updated February 2015

Filename: A133 FACCR 66458 Clean Water Revolving Fund 2014 (includes ARRA) Feb15.docx CFDA #66.458 - 13/83

* Cross-reference to the working papers where the tests of controls or compliance tests have been performed.

Planning Federal Materiality by Compliance Requirement
(1) / (2) / (6) / (6) / (3) / (4) / (5) / (5) / (6)
Compliance Requirement / Applicable per Compl.
Suppl. / Direct & material to program / entity / Monetary or nonmonetary / If monetary, population subject to require. / Inherent risk (IR) assess. / Final control risk (CR) assess. / Detection risk of noncompl. / Overall audit risk of noncompl. / Federal materiality by compl. requirement
(Yes or No) / (Yes or No) / (M/N) / (Dollars) / (High/Low) / (High/Low) / (High/Low) / (High/Low) / typically 5% of population subject to requirement
A / Activities Allowed or Unallowed / Yes / M / 5%
B / Allowable Costs/Cost Principles / Yes / M / 5%
C / Cash Management / Yes / N / 5%
D / Davis-Bacon Act / Yes / N / 5%
E / Eligibility / No
F / Equipment & Real Property Mgmt / No
G / Matching, Level of Effort, Earmark / Yes / M / 5%
H / Period of Availability / Yes / M / 5%
I / Procurement & Sus. & Debarment / Yes / N / 5%
J / Program Income / Yes / M / 5%
K / Real Property Acq. & Rel. Asst. / No
L / Reporting / Yes / N / 5%
M / Subrecipient Monitoring / Yes / N / 5%
N / Special Tests & Provisions
ARRA - Subrecipient Monitoring / Yes / N / 5%
N / Special Tests & Provisions ARRA - Separate Accountability / Yes / N / 5%
N / Special Tests & Provisions ARRA - Presentation on SEFA / Yes / N / 5%

(1) Taken from Part 2, Matrix of Compliance Requirements, of the OMB Circular A-133 Compliance Supplement (http://www.whitehouse.gov/omb/financial_fin_single_audit/). When Part 2 of the Compliance Supplement indicates that a type of compliance requirement is not applicable, the remaining assessments for the compliance requirement are not applicable.

(2) If the Supplement notes a compliance requirement as being applicable to the program in column (1), it still may not apply at a particular entity either because that entity does not have activity subject to that type of compliance requirement, or the activity could not have a material effect on a major program. If the Compliance Supplement indicates that a type of compliance requirement is applicable and the auditor determines it also is direct and material to the program at the specific entity being audited, the auditor should answer this question “Yes,” and then complete the remainder of the line to document the various risk assessments, sample sizes, and references to testing. Alternatively, if the auditor determines that a particular type of compliance requirement that normally would be applicable to a program (as per part 2 of the Compliance Supplement) is not direct and material to the program at the specific entity being audited, the auditor should answer this question “No.” Along with that response, the auditor should document the basis for the determination (for example, "Davis-Bacon Act does not apply because there were no applicable contracts for construction in the current period" or "per the Compliance Supplement, eligibility requirements only apply at the state level").

(3) Refer to the AICPA Audit Guide Government Auditing Standards and Circular A-133 Audits, chapter 10, Compliance Auditing Applicable to Major Programs, for considerations relating to assessing inherent risk of noncompliance for each direct and material type of compliance requirement. The auditor is expected to document the inherent risk assessment for each direct and material compliance requirement.

(4) Refer to the AICPA Audit Guide Government Auditing Standards and Circular A-133 Audits, chapter 9, "Internal Control Over Compliance for Major Programs," for considerations relating to assessing control risk of noncompliance for each direct and material types of compliance requirement. To determine the control risk assessment, the auditor is to document the five internal control components of the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (that is, control environment, risk assessment, control activities, information and communication, and monitoring) for each direct and material type of compliance requirement. Keep in mind that the auditor is expected to perform procedures to obtain an understanding of internal control over compliance for federal programs that is sufficient to plan the audit to support a low assessed level of control risk. If internal control over compliance for a type of compliance requirement is likely to be ineffective in preventing or detecting noncompliance, then the auditor is not required to plan and perform tests of internal control over compliance. Rather, the auditor must assess control risk at maximum, determine whether additional compliance tests are required, and report a significant deficiency (or material weakness) as part of the audit findings. The control risk assessment is based upon the auditor's understanding of controls, which would be documented outside of this template. Auditors may use the practice aid, Controls Overview Document, to support their control assessment. The Controls Overview Document assists the auditor in documenting the elements of COSO, identifying key controls, testing of those controls, and concluding on control risk. The practice aid is available in either a checklist or narrative format.

(5) Audit risk of noncompliance is defined in Statement on Auditing Standards No. 117, Compliance Audits (AICPA, Professional Standards, vol. 1, AU sec. 801/AU-C 935), as the risk that the auditor expresses an inappropriate opinion on the entity's compliance when material noncompliance exists. Audit risk of noncompliance is a function of the risks of material noncompliance and detection risk of noncompliance.

(6) CFAE included the typical monetary vs. nonmonetary determinations for each compliance requirement in this program. However, auditors should tailor these assessments as appropriate based on the facts and circumstances of their entity’s operations. AU 801 / AU-C 935.13 & .A7 require auditors to establish and document two materiality levels: (1) a materiality level for the program as a whole. The column above documents quantitative materiality at the PROGRAM LEVEL for each major program; and (2) a second materiality level for the each of the applicable 14 compliance requirement listed in A-133 § .320(b)(2)(xii).

Note:

a. If the compliance requirement is of a monetary nature, and

b. The requirement applies to the total population of program expenditure,

Then the compliance materiality amount for the program also equals materiality for the requirement. For example, the population for allowable costs and cost principles will usually equal the total Federal expenditures for the major program as a whole. Conversely, the population for some monetary compliance requirements may be less than the total Federal expenditures. Auditors must carefully determine the population subject to the compliance requirement to properly assess Federal materiality. Auditors should also consider the qualitative aspects of materiality. For example, in some cases, noncompliance and internal control deficiencies that might otherwise be immaterial could be significant to the major program because they involve fraud, abuse, or illegal acts. Auditors should document PROGRAM LEVEL materiality in the Record of Single Audit Risk (RSAR).

(Source: AOS CFAE)

Filename: A133 FACCR 66458 Clean Water Revolving Fund 2014 (includes ARRA) Feb15.docx CFDA #66.458 - 13/83

* Cross-reference to the working papers where the tests of controls or compliance tests have been performed.

Auditor Identification of ARRA Findings

The audit finding detail as described in §___.510(b)(1) of OMB Circular A-133 is required to include Federal program and specific Federal award identification including the CFDA title and number. The auditor should include in the audit finding detail explicit identification of applicable ARRA programs.

(Source: 2014 OMB Circular A-133 Compliance Supplement, Appendix 7)

The A-102 Common Rule

A-102 Common Rule applies to State & Local Governments; A-110 (2 CFR Part 215) applies to Universities & Non-Profit Organizations.

Use the following convention to refer to the federal agency codification of the A-102 Common Rule: (A-102 Common Rule: §___.36). Auditors should replace the “§___” with the applicable numeric reference.

Appendix II of the OMB A-133 Compliance Supplement identifies each agency’s codification of the A-102 Common Rule. If a citation is warranted, auditors should look up where the federal awarding agency codified the A-102 Common Rule. For example, a Cash Management citation for a U.S. Department of Education grant would cite 34 CFR 80.21 (34 CFR 80 coming from Appendix II of the OMB A-133 Compliance Supplement, and .21 coming from Section C below, Source of Governing Requirements for A-102 Common Rule entities. There are other “sources of governing requirements” noted in each section as well, this is just an explanation for the A-102 Common Rule references.

Appendix I of the OMB A-133 Compliance Supplement includes a list of programs excluded from the requirements of the A-102 Common Rule.

(Source: AOS CFAE)

Conclusion
The opinion on this major program should be:
Unqualified:
Qualified (describe):
Adverse (describe):
Disclaimer (describe):
Cross-reference to significant compliance requirements obtained from reviewing the grant agreement; terms and conditions; etc. , if any, added to and documented within the FACCR by auditor (Note: Audit staff should document these items within the appropriate FACCR section for the 14 compliance requirements. Likewise, auditors should indicate below if there were no additional significant compliance requirements to be added to the FACCR.):